What are the best ways to get finance for your business? –
03-20-2014,10:09 PM

I am currently considering a number of options for a new business. All of these would require some level of finance. Is it better that I save up, go to an independent lender or go to my bank? I obviously want to avoid any unnecessary costs and overheads.

The best cash you'd get for your business is that kind you don't have to pay back. That could be your savings, money you get from family or money you can obtain from selling an asset you don't need that much.

However, since these options may not be available to many people, you'd have to settle borrowing money. If you are a member of a credit union, you could try getting money from them because it's easier to get a loan there than in a bank.

In my opinion, it's best to save up and get the business started and then just go to the bank for a loan when you can prove that the system is working, as I think it just makes everyone a lot more comfortable with the situation and also it lessens the risk for both sides. However, if it would take you a long time to save, then I don't see why you shouldn't start off with a loan from either an independent source or a bank, as long as you have a good and solid plan that you are confident in enough to make promises of future profit.

When you look at financing for your business there are some factors that you need to consider. The type of business and the start-up costs are very important. You also need to draw-up a business plan in order to forecast your potential sales, costs, profit or loss for the first 12 months. If you are able to save enough money to start your business, then that would be the way to go - no interest and less pressure on your business.

Most new businesses will start with a combination of savings and financing through banks. Be careful of lenders that charge high interest rates, it is not worth your while. Always make sure that you will be able to repay the monthly instalments on your loan if you should decide to finance your business

Getting financing for your business idea is one of the most difficult task associated with starting a business. Every method has its set of pros and cons. For instance, if you take up a loan from a bank, it will result in an interest burden and you will also need to put up a collateral for it but you are free from other obligations. And though the investment of the independent investor comes without such riders, it results in too much influence of the investor which might harm the business. So, I would recommend you to weigh up the pros and cons of various methods and then decide.

For the money that you can't get yourself (selling things you have, borrowing from relatives etc) I'd go with a bank. Keep in mind that the more you can provide yourself, the more likely it is for the bank to give you a loan (and a good %) because the risk is lower.

As most people said, save up I would say. A new business can be stressful to take off the ground, and it's much harder if you have the pressure of a loan hanging over you.

I would say make business plan, research all, and figure out how much you can earn, and how much you need to start.
Project a plan to complete within few months, of how you will make the money you need. Then self-finance yourself, by selling something you don't need, setting aside any money you can, and making the rest through side jobs and may be investments(if you have any idea how to do those of course).

I'm not sure if you're talking about a small independent business or something else, but one option I didn't see mentioned, for raising the money, or part of them, seems crowd sourcing- going on one of those websites like kickstarter or gofund (or was it gofundme?), explain your situation and ask people to pledge small chunks of the money you need. Who knows, it might just work...Good luck in any case!